Mervyn’s Blames Former Owners for Bankruptcy
New York City Mervyn’s Holdings LLC has sued its former private-equity owners, saying the firms stripped out real estate then leased it back to Mervyn’s at higher rates, pushing it into bankruptcy, according to a Reuters report.
Mervyn’s was purchased in 2004 by a group of investors including Cerberus Capital Management and Sun Capital Partners. The deal forced Mervyn’s to transfer nearly all of its real estate assets to a newly formed entity.
As a result, Mervyn’s had to pay rents for locations that, before the deal, it had either owned or leased at rates that were often below market rates, the report said, citing documents filed at the bankruptcy court in Delaware.
“By separating Mervyn’s real-estate assets from its retail operations, the private-equity players made sure that any residual value or upside in the real estate assets were reserved for themselves and not for Mervyn’s,” according to the documents. “The 2004 transaction is a transaction that ultimately led to Mervyn’s bankruptcy and is a fraudulent transfer that cannot withstand scrutiny.”
When Mervyn’s filed for bankruptcy in July, it had 177 stores in seven states, employed about 18,000 people and had annual revenue of about $2.5 billion. The company has so far announced plans to close 26 stores and cut about 1,700 workers as part of a restructuring plan.
Bon-Ton Stores announces September Goodwill Sale
YORK, Pa. The Bon-Ton Stores announced its semi-annual Goodwill Sale, which will take place between Sept. 10 and Sept. 22.
Customers who donate clean, gently-used clothing and home textiles at participating locations will receive 20% off coupons toward the purchase of new fall merchandise, including apparel and cosmetics. One coupon is given per donated item. The donations will be sold at Goodwill Industries retail stores, where the revenue generates job training programs and career services for local communities.
In spring 2008, Bon-Ton’s semi-annual Goodwill Sale generated nearly 3.3 million pounds of donated clothing and textiles, which in turn earned an estimated $2.3 million in revenues for Goodwill.
“This semi-annual event is a wonderful benefit to our customers. Our customers can donate their items to be re-sold for a great cause while receiving a substantial discount on new fall fashions,” commented Bon-Ton Stores president and ceo Bud Bergren. “The Goodwill Sale exemplifies our commitment to the communities in which we operate.”
“Bon-Ton is a valuable partner,” said Jim Gibbons, president and ceo of Goodwill Industries International. “By donating to Goodwill, Bon-Ton shoppers are helping people in their local community find and keep good jobs.”
Staples 2Q sales up 18%
FRAMINGHAM, Mass. Staples reported that total company sales for the second quarter increased 18% to $5.1 billion compared to the second quarter of 2007. Net income declined 16% year over year to $150 million, and earnings per share, on a diluted basis, decreased 16% 21 cents, from the 25 cents.
“I am proud of our team for continuing to manage our business carefully during challenging economic times,” said Ron Sargent, Staples’ chairman and ceo. “We are optimistic about the future for each of our three businesses. We’re excited about the opportunity to drive immediate shareholder value by integrating the Corporate Express acquisition into our North American Delivery business, we’re working hard to improve store productivity in North American Retail, and we’re taking the right steps to build on our foundation for long term growth in International markets.”